TJX: off-price and on the money
TJX's value proposition keeps luring bargain-hungry customers to its brick-and-mortar stores, as the company topped same store sales forecasts during the second quarter and raised its full year earnings guidance.
That value proposition helped TJX report a 6 percent rise in same-store sales, blowing past the 2.2 percent increase analysts had expected.
Unlike Macy's, JCPenney and other retailers, which have closed stores and shifted their focus online, TJX has thrived by leveraging consumers' appetite for the treasure hunt. The retailer treasure hunt style business model and deep discounts are especially attractive to younger buyers like millennials and Gen Z.
“We are extremely pleased with our second quarter results," said Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. "Both our consolidated comp store sales growth of 6% and earnings per share of $1.17 significantly exceeded our expectations. Marmaxx, our largest division, delivered a very strong 7% comparable store sales increase. Customer traffic was once again the primary driver of our comp store sales increases at all of our divisions as we continue to reach a very wide customer demographic. Further, this marks the 16th straight quarter of customer traffic increases for TJX and Marmaxx. We have been attracting new customers to all our divisions, a significant share of whom are younger customers. This is great for our business today and for the future. Our teams delivered sharp execution of our off-price fundamentals across the Company, and customers responded to our great brands, fashions, and eclectic selections at excellent values. We were especially pleased with the robust performance of our apparel business. With our strong second quarter performance, we are raising our guidance for full-year earnings per share and comparable store sales growth. Looking forward, the third quarter is off to a very strong start and we have many exciting opportunities we are pursuing in the second half of the year. We are very confident that we will continue to gain market share and grow successfully around the world!”
The company’s net income rose to $739.6 million, or $1.17 per share, in the second quarter, from $553 million, or 85 cents per share, a year earlier. Net sales for the second quarter of Fiscal 2019 increased 12% to $9.3 billion.
The retailer raised its full year adjusted profit forecast to $4.10 to $4.14 per share from a prior outlook of $4.04 to $4.10 per share.
During the second quarter ended Aug. 4, the company increased its store count by 53 stores to a total of 4,194 stores. The company increased square footage by 5% over the same period last year. In an earnings call, the company said it expects its long-term growth potential is 6,100 stores.
"We target an extremely wide customer demographic which also gives us greater flexibility to open stores in urban, suburban and rural locations. We believe our e-commerce sites are also driving customer traffic to our stores, although still a small piece of our overall business, we feel great about our differentiation strategies and the growth of both our U.S. and UK e-commerce sites," Herrman said.
The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The company operates stores in nine countries, the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, and three e-commerce sites. These include 1,236 T.J. Maxx, 1,077 Marshalls, 716 HomeGoods, 33 Sierra Trading Post, and 8 Homesense stores, as well as tjmaxx.com and sierratradingpost.com in the United States; 270 Winners, 120 HomeSense, and 79 Marshalls stores in Canada; 552 T.K. Maxx and 61 Homesense stores, as well as tkmaxx.com, in Europe; and 42 T.K. Maxx stores in Australia.